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Bailout request by Spain would not affect debt rating: S&P

Madrid (AFP) – Ratings agency Standard and Poor’s said Wednesday that if Spain requested a full bailout from European Union rescue funds and the IMF, this would not affect the country’s debt rating. “The sovereign ratings on the Kingdom of Spain would likely not be directly affected should Spain’s government request a bailout through official …

Madrid (AFP) – Ratings agency Standard and Poor’s said Wednesday that if Spain requested a full bailout from European Union rescue funds and the IMF, this would not affect the country’s debt rating.

“The sovereign ratings on the Kingdom of Spain would likely not be directly affected should Spain’s government request a bailout through official financing by the European Financial Stability Facility, the European Stability Mechanism, or the International Monetary Fund,” the agency said in a statement.

Standard & Poor’s cut Spain’s sovereign debt rating in April by two notches to BBB+ and added a negative outlook, warning the government’s budget situation would worsen as the Spanish economy contracts.

Spain’s eurozone partners agreed in June to lend up to 100 billion euros ($124 billion) to salvage the nation’s banks, buckling under record bad loans built up since a 2008 property crash.

But investors increasingly believe that the country will be forced to request a full bailout for its economy as Spain struggles to borrow money on the international markets at affordable rates.